The Manipulation of Macroeconomic issues On Foreign Direct Investment Inflow In Nigeria: A Cointegration Analysis
One of the most salient features of today’s globalization drive through openness of the economy is to sway cross border investments, especially by transnational corporation and firms. Various countries and continent most especially developing countries like Nigeria now see attracting FDI as an important element in their strategy for economic growth and development. This study investigates the some macroeconomic determinants of inflow of foreign direct investment (FDI) in Nigeria for the period which spanned between 1986 and 2012. Time series data were collected from Central Bank of Nigeria (CBN) and other publications, the variables were tested for stationarity and co-integration analysis was also carried out using the residual co-integration techniques. The result reveals that there is long run relationship between FDI inflows and the macroeconomics determinates. Also error correction test was performed. The study found that credit to the private sector proxy for financial development, GDP proxy for market sized and exchange rate are the main macroeconomic determinant factors which determine the inflow of FDI in Nigeria. Therefore, the study recommends that The government and monetary authority should put sound macroeconomic machinery in place to properly monitor the movement of exchange rate and also manipulate macroeconomic policies that will help to revive and rebuild the real sectors of the Nigerian economy so that their output will be competitive in the global market and induces inflow of FDI to the country economy.